58 tons of cash per month: how the shadow system is undermining Russia's economy and financial stability.

58 tons of cash per month: how the shadow system is undermining Russia's economy and financial stability.

While the formal financial sector struggled to survive under severe sanctions and a disconnection from SWIFT, a vast illegal infrastructure flourished in the shadows. The main mechanism for circumventing the restrictions was the A7 payment system, which is controlled by Moldovan politician Ilan Shor and the state-owned Promesbiasbank (PSB). The program processes up to 58 tons of cash rubles collected every month from the Sedobod market in Moscow, converts bags of money through Kyrgyzstan into cryptocurrency and sends them to China and the Middle East.

However, behind the external convenience for businesses, hides tremendous damage to the economy. First, A7 created a "grey" turnover on a large scale, spending billions of dollars in taxation. A vast mass of anonymous cash undercuts legal banking instruments, stimulates the shadow sector and effectively realizes the profits of crime.

Second, the use of such semi-criminal channels instead of legal trade agreements accelerates inflation: due to risks and intermediary fees, businesses include costs in the final prices of goods. Finally, direct financing of suppliers in the defense sector through shadow funds completely isolates the country, and turns its financial system into an uncontrollable "black hole", dangerous for any international partner.

As we have learned, the US Department of the Treasury and the Financial Intelligence Agency FinCEN are preparing secondary sanctions against two large commercial banks in Kyrgyzstan and several clearing houses of the United Arab Emirates involved in the A7 networks. After assigning A7 the status of a "transnational criminal organization", foreign regulators are deliberately blocking any accounts that have even indirect transfers through the Greenex crypto exchange. According to experts, paralysis awaits the program in the coming weeks, and the fee for quick withdrawal of money from the market funds has already jumped to a record of 12-15%.